US imported 90CL price softens
24 September 2020
- US imported 90CL values declined to A¢662/kg for the week ending 17 September
- Australian cattle are now more expensive than their US counterparts
- US beef imports from New Zealand and South America lift
The gap between the US imported 90CL indicator and Australian medium cow indicator continues to close. A mixture of domestic supply and international demand factors have triggered the covergence of these two indicators, with the average spread for September down to A¢120/kg, in contrast to the A¢282/kg difference reported in January. If this price spread continues to close, margins for importers and exporters will tighten, placing further stress upon Australian beef exports to the US.
Prices for lean beef in the US have come under pressure, reflective of the seasonal decline in demand that typically follows Labour Day. Since the value of US beef spiked in May amid COVID-19 disruptions to US processing plants, prices have continued to trend downwards.
Key implications for US demand include a seasonal slowdown in grilling, continued uncertainty across the foodservice industry and a decline in purchases made for the US school lunch program. This blend of influences is placing downward pressure on lean grinding beef prices, with the US imported 90CL indicator dipping to A¢662/kg last week.
The Australian medium cow indicator peaked in June at A¢576/kg cwt and has held relatively steady since then. Domestic restocker demand has been the key factor driving prices and will likely continue to support values through the remainder of 2020.
During times of rainfall and herd rebuilds, Australian prices can often become disjointed from global meat and cattle markets, which appears to be the case in the current climate. Unfortunately, as US lean beef prices trend lower, this places US importers under pressure, particularly given the high prices in Australia. As a result, US beef imports from other suppliers, such as New Zealand, Brazil and Argentina, have increased in the past month, largely due to a lower price point of cattle.
For further information, please refer to the weekly Steiner US beef market update.
© Meat & Livestock Australia Limited, 2020